CMA Consolidated, Inc. & Subsidiaries, Inc. - Page 8

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          percent shareholder and ultimate decision maker) often served as            
          a 1-percent or less general partner of the partnership.                     
               The two lease strip deals involve computer and photo                   
          processing equipment subject to two existing end-user leases.               
          One end-user lease agreement, dated October 26, 1989 (hereinafter           
          for convenience referred to as the K-Mart end-user lease or K-              
          Mart lease), involved the lease of existing and after-acquired              
          photo processing equipment by Varilease Corp. (Varilease) to K-             
          Mart Corp. (K-Mart).  On January 22, 1992, Computer Leasing, Inc.           
          (CLI), purchased the equipment subject to the K-Mart lease along            
          with Varilease’s rights and obligations under the lease.  On May            
          18, 1994, additional equipment was added to the K-Mart end-user             
          lease.  The other end-user lease agreement dated July 1, 1993               
          (hereinafter for convenience referred to as the Shared end-user             
          lease or Shared lease), involved the lease of computer equipment            
          by CLI to Shared Medical System Corp. (Shared).                             
               Starting with the K-Mart and Shared end-user leases and                
          certain other equipment leases with three other end users, a                
          series of preconceived transactions was arranged with respect to            
          that equipment.  The transactions were intended to create                   
          residual lease periods beginning after the conclusion of the                
          existing end-user leases with K-Mart, Shared, and the other end             
          users.  The transactions served as a foundation for two lease               
          strip deals under which the rental income streams from the                  






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